Abstract- The 'Fane v. Edenfield' case challenged Florida's statute and regulation banning in-person solicitation by CPAs. Fane instituted the lawsuit to have the prohibition declared unconstitutional under the First Amendment which guarantees free speech. Fane argued that the ban restricts commercial speech, does not promote the interest of the state in regulating the profession of accountancy and is not narrow in scope. In accordance with the lower court and the appellate court, the Supreme Court averred that it has not been sufficiently proven that the prohibition of CPA solicitation furthers the interest of the state in any way. This decision indicates that it is still possible to uphold policies banning solicitation as long as there is credible evidence to support it.

The view of the Justice Department which supports the spirit of the
FTC/AICPA consent order is that a complete ban on advertising and
solicitation violates antitrust law absent a state-action exemption. A
state-action exemption provides a state with immunity from antitrust law
if the restraint is clearly articulated, expressed, and administered by
a state as state policy.

Four states (Florida, Georgia, Texas, Louisiana) have state statutes
prohibiting in-person solicitation by CPAs. These statutes clearly
prohibit what the AICPA now allows under its consent order with the FTC,
namely, that it is permissible to solicit any potential client by any
means, including direct solicitation. Twelve other states prohibit in-
person solicitation by rule of accounting boards.

A Challenge

In the case of Fane v. Edenfield, 945 F.2d 1514 (11th Cir. 1991), the
Florida statute and regulation prohibiting direct solicitation was
challenged. The challenge was to be expected to determine how much
restriction, if any, on the promotional efforts of CPAs is legally
enforceable in light of the fact that the restraints may not be
constitutional under the First Amendment of the Constitution which
guarantees free speech.

The significance of the case is highlighted by the fact that the Supreme
Court agreed to decide whether states may prohibit accountants from
soliciting business in person. In the past the Supreme Court has ruled
that commercial speech deserves substantial protection under the
guarantee of the First Amendment but has allowed restrictions on
commercial speech if they are narrow in scope and further an important
state interest.

Case For Ban on In-Person Solicitation by CPAs

* There is a need to preserve and protect the public's ability to rely
on the independence and objectivity of CPAs.

* Because there is no acceptable method of regulating in-person
solicitation, a prophylactic rule against its utilization is necessary.

* A government may ban commercial speech that is more likely to
deceive the public than to inform it.

* The relationship between the legislature's means and ends must be
reasonable but does not require perfection.

* A state does not lose its power to regulate commercial activity
deemed harmful to the public where speech is a component of the
activity. Therefore, simply because Florida's regulation involves speech
does not mean that the regulation must be struck down on constitutional
grounds.

* The degree of protection afforded commercial speech is toward the
low end of the scale.

* It is not the court's place to second guess state officials about
their rules.

* States are largely free to regulate the professionals which they
license.

* States may ban in-person solicitation because it inherently opens
the door to fraud, undue influence, intimidation, and overreaching.

* With advertising, generally the recipient may simply turn away, but
in-person solicitation may exert pressure and often demand an immediate
response.

Case Against Ban on In-Person Solicitation

* It is unconstitutional to restrict |commercial speech because it
does not further the state's interest in regulating the accounting
profession nor is it narrowly tailored to that end.

* Imposition of the ban upon CPAs but not on other professionals who
perform the same tasks is a violation of equal protection.

* Commercial speech furthers the economic interests of the speaker
while also informs the consumer audience.

* Dissemination of commercial information is a benefit to consumers
and society.

* The mere possibility that isolated abuses or mistakes may occur does
not justify a total ban on a certain mode of protected commercial
speech.

* In assessing the restriction on commercial speech, it must be
determined that government interest is substantial, the regulation
directly advances the government interest and whether government
regulation is more extensive than necessary.

* Prophylactic restraints on commercial speech based on unsupported
assertions or unsubstantiated fears are not acceptable.

* The utilization of an advertising ban to protect the ethical or
performance standards of a profession is impermissible.

* It acts as a ban on in-person solicitation rather than regulating
the details of when, where, and how a CPA may engage in such
solicitation.

* The possibilities for overreaching, invasion of privacy, exercising
undue influence, and outright fraud are remote in the accounting
profession.

Factual Background of the Case

Fane is a CPA licensed in New Jersey and Florida who moved to Florida to
set up an accounting practice and sought to solicit business via in-
person contacts with businesses he felt would be interested in his
services. He was not able to implement his planned solicitation,
however, because in-person solicitation by CPAs is forbidden in Florida.
The ban applies only to CPAs. Other financial professionals such as non-
certified accountants, bookkeepers, and tax preparers are not prohibited
from utilizing personal contacts to solicit new clients.

Fane instituted this lawsuit to have Florida's prohibition of in-person
solicitation by CPAs declared unconstitutional. The Board disputed any
constitutional violation created by the proscription. The district court
granted Fane's motion for summary judgment and enjoined the Board from
enforcing the ban on in-person solicitation by CPAs in Florida. The
Board then perfected its appeal to this court.

The only issue raised by the Board that the government addressed is
whether the district court correctly determined that Florida's
prohibition on in-person solicitation by CPAs is unconstitutional. Fane
contended that Florida's prohibition against in-person solicitation by
CPAs is an unconstitutional restriction of commercial speech because the
restraint does not further the state's interest in regulating the
accounting profession, nor is it narrowly tailored to that end. Fane
also maintained that the imposition of the ban upon CPAs but not on
other accounting professionals who perform the same task is a violation
of equal protection. The position of the Board was that the ban is
necessary to protect a CPA's integrity, independence, and objectivity
while performing the attest function. The Board also argued that the ban
is a permissible time, place, and manner restriction that is content
neutral.

The Decision

The court noted that it did not lightly interfere with a state's power
to regulate the professions which practice within it. Nevertheless, the
state's regulatory power cannot be used to insulate restrictions of
constitutionally protected speech from the review of the court for
constitutional infirmity. In this case the court stated Florida's
restriction on in-person solicitation by CPAs does not directly advance
the state's asserted interest. The justification offered for the ban
could be served equally well by existing regulations imposed on the
accounting profession or by a more limited restriction of the protected
speech. The court therefore affirmed the district court's order granting
summary judgment in favor of Fane and enjoined the State of Florida from
enforcing its ban on in-person solicitation by CPAs.

Supporters of the ban on direct uninvited solicitation who view such
activities as 1) a manifestation of a trend away from professionalism,
2) a force which compromises independence in mental attitude, and 3) a
form of unfair competition and opponents of the ban who view it as 1) a
barrier to free competition, 2) a deterrent to fair fees, and 3) an
impediment to an efficient market for accounting service waited with
interest for the Supreme Court's decision.

The Supreme Court Decision

On April 26, 1993, the Supreme Court affirmed the decision of both the
lower court and the appellate court.

The court held that the type of personal solicitation contemplated by
Fane is commercial expression to which the protection of the First
Amendment apply.

From a public policy viewpoint the court was of the opinion that
solicitation may have considerable value. The court noted that unlike
many other forms of commercial expression, solicitation allows direct
and spontaneous communication between buyer and seller. A seller has a
strong financial incentive to educate the market and stimulate demand
for his or her product or service, so solicitation produces more
personal interchange between buyer and seller than would occur if only
buyers were permitted to initiate contact. Personal interchange enables
a potential buyer to meet and evaluate the person offering the product
or service and allows both parties to discuss and negotiate the desired
form for the transaction or professional relationship. Solicitation also
enables the seller to direct his proposals toward those consumers who he
has a reason to believe would be most interested in what he has to sell.
For the buyer, it provides an opportunity to explore in detail the way
in which a particular product or service compares to its alternatives in
the market. In particular, with respect to nonstandard products like the
professional services offered by CPAs, these benefits are significant.

The court concluded in denying CPAs and their clients these advantages,
Florida's law threatened societal interests in broad access to complete
and accurate commercial information that First Amendment coverage of
commercial speech is designed to safeguard.

In contrast the dissenting justice, Justice O'Connor held that there was
a broader authority for the States to prohibit commercial speech that,
albeit not directly harmful to the listener, is inconsistent with the
speaker's membership in a learned profession and therefore damaging to
the profession and society at large.

The majority did recognize that States have the right to ban commercial
expression that is fraudulent, invades privacy or in the case of CPAs
impairs independence or creates a conflict of interest. However, as to
the specific ban of commercial speech in the case of CPAs the interests
can not be stated in the abstract or be speculative or based on
conjecture.

The court concluded that the Board had not demonstrated that, as applied
in the business context, the ban on CPA solicitation advances its
asserted interests in any direct and material way.

Comment

The decision of the court does not totally preempt states from limiting
commercial speech in the area of CPAs' solicitation. Rather what the
decision of the court does is point the way to how bans on solicitation
can be upheld if creditable evidence can be offered which justifies the
ban. Important to the decision making of the court was the AICPA
committee's statement it was unaware of any empirical data supporting
the theories that CPAs (a) are not independent of clients obtained by
direct uninvited solicitation or (b) do not maintain their independence
in mental attitude toward those clients subjected to direct uninvited
solicitation by another CPA.

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